The Justice Department and the U.S. Drug Enforcement Administration (DEA) announced on June 18 a 10-count superseding indictment, charging Los Angeles-based individuals linked to Mexico’s Sinaloa drug cartel with conspiring with money-laundering groups linked to a Chinese underground banking network in order to launder drug trafficking proceeds.
Cartel members linked to Mexico used a Chinese underground banking system in order to launder money made from selling meth and cocaine. The Sinaloa Cartel is one of the largest-known crime syndicates in the world. It was run, famously, by Joaquín “El Chapo” Guzmán, who is currently serving a lifetime sentence at a maximum security prison in Colorado. Investigators also say the Sinaloa cartel is responsible for a glut of fentanyl in the country for the past eight years.
Called “Operation Fortune Runner,” federal agents issued the indictment on April 4 and it was unsealed on Monday, charging a total of 24 defendants with one count of conspiracy to aid and abet the distribution of cocaine and methamphetamine, one count of conspiracy to launder monetary instruments, and one count of conspiracy to operate an unlicensed money transmitting business.
Throughout the course of the conspiracy, over $50 million in drug proceeds flowed between the Sinaloa Cartel associates and Chinese underground money exchanges. Authorities in both Mexico and China alerted U.S. law enforcement that they had caught suspects attempting to flee the U.S. after being charged last year.
To transfer money to the United States, a China-based investor contacts an individual who has U.S. dollars available to sell. Then the seller of U.S. dollars provides identifying information for a bank account in China with instructions for the investor to deposit Chinese currency into that account. Once the owner of the account sees the deposit, an equivalent amount of U.S. dollars is released to the buyer in the United States.
Edgar Joel Martinez-Reyes, 45, of East Los Angeles, who is being named the lead defendant, and others allegedly used a variety of methods to hide their trail of money, “structuring” assets to avoid federal financial reporting requirements, and the purchase of cryptocurrency. Federal authorities also found a cache of cocaine, shrooms, ecstasy, meth, and ketamine.
“Relentless greed, the pursuit of money, is what drives the Mexican drug cartels that are responsible for the worst drug crisis in American history,” said DEA Administrator Anne Milgram. “This DEA investigation uncovered a partnership between Sinaloa Cartel associates and a Chinese criminal syndicate operating in Los Angeles and China to launder drug money. Laundering drug money gives the Sinaloa Cartel the means to produce and import their deadly poison into the United States. DEA’s top operational priority is to save American lives by defeating the cartels and those that support their operations. This investigation is the latest example, and there is more to come.”
Twenty of the individuals named in the indictment are expected to be arraigned in the U.S. District Court in downtown Los Angeles within weeks, including one who was arraigned on Monday.
The Battle Against Drug Trafficking
“Dangerous drugs like fentanyl and methamphetamine are destroying people’s lives but drug traffickers only care about their profits,” said U.S. Attorney Martin Estrada for the Central District of California. “To protect our community, therefore, it is essential that we go after the sophisticated, international criminal syndicates that launder the drug money. As this indictment and our international actions show, we will be dogged in our pursuit of all those who facilitate destruction in our country and make sure they are held accountable for their actions.”
The investigation involved IRS authorities as well that helped track down the paper trail.
“Drug traffickers generate immense amounts of cash through their illicit operations. This case is a prime example of Chinese money launderers working hand in hand with drug traffickers to try to legitimize profits generated by drug activities,” said Chief Guy Ficco of IRS Criminal Investigation. “We have made it a priority to identify, disrupt, and dismantle any money launderers working with drug cartels and we are committed to our partnerships with federal, state, and local law enforcement agencies to combat drug cartels and those who assist them in laundering drug proceeds.”
As part of this investigation, law enforcement reported they had seized approximately $5 million in drug proceeds,with 302 pounds of cocaine, 92 pounds of methamphetamine, 3,000 Ecstasy pills, 44 pounds of psilocybin (magic mushrooms), numerous ounces of ketamine, three semi-automatic rifles with high-capacity magazines, and eight semi-automatic handguns.
The Department of Justice announced similar indictments last January.
Dozens of individuals allegedly linked to the most powerful cartel in Mexico were arrested and charged by federal agents in California and elsewhere in the western United States, the Department of Justice announced in January.
The DOJ said that 14 “indictments were unsealed, charging 47 alleged members of an Imperial Valley, California-based, Sinaloa Cartel-linked fentanyl-and-methamphetamine distribution network with drug trafficking, firearms, and money laundering offenses.”